Jack owns an office building in India that he inherited 10 years ago. This tax year has a FMV of $1,200,000 and a $700,000 mortgage on it. He wants to exchange his building with Jill for her building in Arizona that has a FMV of $2,000,000 and an adjusted basis of $500,000.

Compute Jack and Jills realization and recognition of gains and the basis in the like-kind property each receives from the other.